AFA seeks to move ahead of opt-in changes

The Association of Financial Advisers (AFA) is canvassing members’ opinions on the new client opt-in and fee disclosure arrangements as it seeks to formulate its responses before the Government introduces legislation next year.

In doing so, the AFA has noted that some superannuation funds have moved ahead of the Government on the issue by demanding that advisers provide proof of client authorisation.

The AFA has used its weekly communication to members to remind them that Government signalled its intentions when the Treasurer, Josh Frydenberg, released the so-called Royal Commission Implementation Roadmap in August.

Related News:

It said that Recommendation 2.1 on Annual Renewal and Payment was on the list for consultation to be completed and the legislation to be introduced to Parliament by 30 June 2020. 

“This is a particularly important piece of legislation as it will impact many clients and will have a material impact upon the cost of providing financial advice,” the AFA said.

It said the key parts to the Government’s legislative approach were extending opt-in to all adviser service fee clients (not just post 1 July 2013 FOFA clients), reducing the timeframe to annual and also the expectation that authorisation will be provided to product providers.

“Activity is already happening in this space with some super fund trustees introducing requirements for clients to provide authorisation. It is also closely linked to issues with respect to charging fees from superannuation accounts,” the AFA said.
It said the exercise represented a good opportunity to have a close look at other issues such as problems and inefficiencies with the FDS and opt-in process and the requirements of the sole purpose test.

“Annual renewal is going to be problematic for lower fee-paying clients, and we do not want to see them become economically unviable as a result. A solution needs to be found so that financial advice remains accessible and affordable for everyday Australians,” the AFA said.

Recommended for you




Low income earners are already unviable, because they won't engage or complete paperwork on an annual basis. The Union Super funds know this, which is why they have 900 advisers salaried via the intra-fund "advice" racket, which ASIC seems totally unwilling to shut down. The lack of a level playing field here is worse than the taxi industry.

One of the biggest problems with Opt-In is the 30 day time limit for clients to respond. Busy clients do not read, let alone act, on personal admin paperwork within that timeframe. Especially when they view it as unnecessary duplication. Advice practices waste enormous amounts of time chasing up Opt-Ins, and this ultimately has to feed into higher costs and/or lower service for clients. This adverse client impact will be effectively doubled with annual Opt-In.

If we have to have Opt-In at all, then can we please have a longer time limit for clients to respond. Reduce the 60 days allowed for practices to send out FDS and RN if necessary. Practices can easily control that, and work with a shorter timeframe. But it's much harder to manage the client response delays within a tight timeframe.

Agree, and the salaried advisers down at Union Super Advice Co don't have to do any of it. Simply unfair & unjust.
The real solution is to move to Opt Out, & to do away with opt-in altogether.

The Opt In process implemented for the Protecting Your Super Life Insurance was an abysmal failure and has resulted in many thousands of super members being inadvertently left without cover.
This is because a vast majority of these people did not respond within the given time frame, not because they purposely elected to forgo their insurance cover.
The case with the Opt In time frame is the same.
Clients may not respond within the given time frame despite being contacted further, however, inadvertently lose access to the adviser .
Documentation provided to clients outlining all the same, clear and concise fee information required, but with an Opt Out provision over a longer time frame would be a significantly better process as the client can always cancel the adviser relationship at any time .

Why don't we just have a monthly opt in? or a weekly one? That will be better wont it?

no because you still have to provide financial services, honestly, fairly and efficiently. far out. wtf do these public servants do all day, scratch their butts and come up with more stupid wank.

Annual opt in is coming both sides agree on it so it will be law. You know what else? Pre FOFA clients will also be subject to it. Any advisers out there with these clients , you better get them on the CSA and into the new regime asap or else the product manufacturers will just turn off the ASF when the code of conduct comes in. Remember clear informed consent as soon as practicable, means brand new CSAs for ALL clients will be required on file asap. The new CSAs will also include annual opt in provisions, don't believe me ask your dealership. .

The big joke here is that the "annual agreement" as proposed by Commissioner Haynes is actually back to the bad old days of stockbroking for a bit of cash for the weekend, or flogging an amortised phone contract up front. The client agrees to a large one off fee & you see them 2, 3, 4 or 5 years later. Totally legit. If the client refuses to renew in 3,4, or 5 yrs later, you then archive their file. Still works out at $30 a month & is actually in line what the small clients can afford. It's a total absolute joke, particularly when the Union Super funds advisers are collective salaries & bonuses without having to organise annual contracts or anything else. This is just going to get uglier & uglier until something snaps.

Add new comment